Thursday, May 29, 2014

Are the Olympics Profitable?

I mentioned yesterday that I'd found a chart of Olympics profits for the past forty years.  The chart is here.  (The usual caveats about Wikipedia apply but it seems to be in good order.  Also, data from some countries is almost certainly more reliable than from others.)  First, the breakdown and then I'll have some comments.

Montreal, '76 - $990 million loss
Lake Placid, '80 - $8.5 loss
Moscow, '80 - unknown
Sarajevo, '84 - $10 million profit
Los Angeles, '84 - $250 million profit
Calgary, '88 - $32 million profit
Seoul, '88 - $300 million profit
Barcelona, '88 - $10 million profit
Albertville, '92 - $67 million loss
Lillehammer, '94 - unknown
Atlanta, '96 - $10 million profit
Nagano, '98 - unknown but a loss
Sydney, '00 - $2.1 billion loss
Salt Lake City, '02 - $101 million profit
Athens, '04 - $14-15 billion loss
Torino, '06 - $3.2 million loss
Beijing, '08 - $146 million profit
Vancouver, '10 - unknown but a loss
London, '12 - approx $70 million profit
Sochi, '14 - too early to tell

It looks like almost half (9 out of 20) were profitable.  If you read through this slideshow, you'll find that it really was a mixed bag.  For instance, Barcelona made a small profit but they spent heavily on infrastructural improvements which have proved to be a long term value.  Other comments:
  • The biggest loser was certainly Athens.  Not only did they lose the most money, the cost of the Olympic games is thought to have contributed to their general financial meltdown.  Their sites have been neglected and are falling apart.  
  • Turin (Torino) posted a small loss but they're also happy with the improvements that the games brought.  Frankly I'm skeptical of any of the numbers that show either a small profit or loss.  For Turin, that meant a budget of $700 million and a loss of less than $4 million.  I'd be shocked if there wasn't some cooking in there.
  • Speaking of cooking, the numbers for Nagano are unknown because the vice secretary general of the Olympic bid committee, a Japanese national, ordered all of the documents to be burned!  Clearly, it was a financial disaster.  Not just then, but ongoing.  It costs about $22 million per year to keep the buildings from falling apart.   
  • The '84 games, both Sarajevo and Los Angeles, were the first ones to turn a profit since 1932.  The '88 games also turned profits.  The reason is simple, this was when the Olympics embraced corporate sponsors.  Yes, that meant increased commercialization.  I'll leave it to the reader to decide if that trade off is worth it.
  • If you read through the slideshow, you'll see that one of the big reasons that the games ultimately succeed or fail is if the host city can plan well enough for continuing use of the stadiums and infrastructure.  If they can figure it out, the games are a boon.  If not, they're an anchor.  I'm guessing that there is a split between summer and winter, but that will have to wait!

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